Correlation Between WisdomTree Cocoa and PIMCO Emerging
Can any of the company-specific risk be diversified away by investing in both WisdomTree Cocoa and PIMCO Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WisdomTree Cocoa and PIMCO Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Cocoa and PIMCO Emerging Markets, you can compare the effects of market volatilities on WisdomTree Cocoa and PIMCO Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WisdomTree Cocoa with a short position of PIMCO Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Cocoa and PIMCO Emerging.
Diversification Opportunities for WisdomTree Cocoa and PIMCO Emerging
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and PIMCO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Cocoa and PIMCO Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Emerging Markets and WisdomTree Cocoa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WisdomTree Cocoa are associated (or correlated) with PIMCO Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Emerging Markets has no effect on the direction of WisdomTree Cocoa i.e., WisdomTree Cocoa and PIMCO Emerging go up and down completely randomly.
Pair Corralation between WisdomTree Cocoa and PIMCO Emerging
Assuming the 90 days trading horizon WisdomTree Cocoa is expected to generate 4.07 times more return on investment than PIMCO Emerging. However, WisdomTree Cocoa is 4.07 times more volatile than PIMCO Emerging Markets. It trades about 0.14 of its potential returns per unit of risk. PIMCO Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 240.00 in WisdomTree Cocoa on September 5, 2024 and sell it today you would earn a total of 1,210 from holding WisdomTree Cocoa or generate 504.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Cocoa vs. PIMCO Emerging Markets
Performance |
| Timeline |
| WisdomTree Cocoa |
| PIMCO Emerging Markets |
WisdomTree Cocoa and PIMCO Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Cocoa and PIMCO Emerging
The main advantage of trading using opposite WisdomTree Cocoa and PIMCO Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Cocoa position performs unexpectedly, PIMCO Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PIMCO Emerging will offset losses from the drop in PIMCO Emerging's long position.| WisdomTree Cocoa vs. WisdomTree Natural Gas | WisdomTree Cocoa vs. WisdomTree NASDAQ 100 | WisdomTree Cocoa vs. WisdomTree Silver 3x | WisdomTree Cocoa vs. WisdomTree SP 500 |
| PIMCO Emerging vs. Leverage Shares 3x | PIMCO Emerging vs. WisdomTree Natural Gas | PIMCO Emerging vs. SP 500 VIX | PIMCO Emerging vs. Leverage Shares 3x |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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